LONDON (Reuters) — The author of a
report into state-backed Royal Bank of Scotland's <RBS.L> lending to
small businesses said he found no evidence of the bank engineering
companies into default.

Andrew Large, who was commissioned by RBS last year to conduct the
review, said he hadn't found anything to back up accusations made in
a separate report by government adviser Lawrence Tomlinson. However,
he did say there was an "element of plausibility" behind them.

Tomlinson had said that RBS, which is 82-percent owned by the
government, pushed struggling small businesses into its Global
Restructuring Group (GRG) turnaround unit, enabling it to charge
higher fees and take control of their assets.

"There's an element of plausibility in the assertions that are in
the Tomlinson report ... but that doesn't mean to say I think those
activities are actually happening. I didn't have any evidence of
them," Large, a former deputy governor of the Bank of England, told
parliament's Treasury Select Committee on Wednesday.

Britain's financial regulator has launched an inquiry into RBS's
treatment of struggling small businesses and will publish its
findings in the third quarter. RBS, meanwhile, has appointed law
firm Clifford Chance to examine the matter.

If the regulator were to find evidence to back up Tomlinson's
claims, RBS could be subject to a criminal investigation.

RBS Chief Executive Ross McEwan said last November that he didn't
believe the bank had conducted a systemic effort to profit on the
back of customers in financial distress and that no evidence had
been provided to support that allegation.

Tomlinson is an adviser within Liberal Democrat Vince Cable's
Business Department, but the report in which his accusations were
published was not an official government report.

Large told the committee that Tomlinson's report amounted to a "set
of assertions" and said that he would have wanted to "put more
substance behind them".